Taxes in Timor-Leste

Individuals who live in Timor-Leste for at least 183 days in any 12-month period beginning or ending in the Tax Year generally qualify as resident natural persons. Resident employees pay Wage Income Tax at 0% on monthly wages up to US$500 and 10% on the excess. Non-resident employees pay 10% on the full wage. Employers withhold the tax, remit it by the 15th of the following month and file the annual wage form by 31 March. Correctly withheld wage tax is generally final, so an employee without a separate business usually does not file an annual income tax return. A resident individual operating a business has an annual tax-free threshold of US$6,000, followed by 10% tax on the excess. A non-resident individual is generally taxed at 10%. A company and other taxable legal entities pay 10% of taxable income, calculated from gross income less deductions allowed by the Taxes and Duties Act. Businesses must register before starting activity, obtain a Tax Identification Number (TIN), and use the ATTL or its e-Tax service for relevant filings. Businesses generally make income-tax installments equal to 0.5% of total turnover. A business whose previous-year turnover exceeded US$1,000,000 pays monthly installments by the 15th, beginning on 15 February. A business at or below that threshold pays quarterly installments on 15 April, 15 July, 15 October and 15 January. These installments are credited against the annual tax; an excess can become overpaid tax. Annual returns, including an income statement, balance sheet and cash-flow statement, are due by 31 March. Withholding tax applies to specified payments. Common rates include 10% for royalties, land or building rent, and prizes; 2% for construction and building work; 4% for construction consulting, project management, engineering and site supervision; 2.64% for air or sea transport; and 4.5% for mining or mining support. Payments to a non-resident without a permanent establishment in Timor-Leste generally face 10% withholding. The payer remits withholding by the 15th of the following month and gives the recipient a withholding notice. Depending on the income and recipient, withholding may be final, meaning the income is not aggregated with other income and no further deduction or refund is available for that income. Services Tax covers hotels, restaurants, bars and telecommunications. A monthly turnover below US$500 produces a 0% rate, while turnover of at least US$500 attracts 5% on the entire monthly turnover. Imports of taxable goods generally attract 2.5% Sales Tax and 2.5% Import Duty based on customs value. Excise Tax applies to selected goods, including alcohol, tobacco, fuel, high-value passenger vehicles, weapons, pleasure boats and private aircraft. For example, beer is charged at US$1.90 per litre, tobacco at US$19 per kilogram and gasoline or diesel at US$0.06 per litre. Exemptions can apply to categories such as diplomatic or United Nations imports, temporary imports, humanitarian goods and certain low-value charges. Timor-Leste had no current VAT registration, rate or refund regime in the ATTL tax list reviewed on 13 September 2026. The Government had prepared a draft VAT law and the 2026 State Budget referred to preparation for a possible 2027 introduction, but proposed VAT rules are not current law until enacted and effective. Petroleum and mineral taxes follow separate specialist regimes administered by the National Directorate of Petroleum and Mineral Revenues (NDPMR), so ordinary business tax rules should not be applied automatically to petroleum activities. Resident taxpayers generally include worldwide income, while non-residents are taxed on Timor-Leste-source income. Foreign tax credits are limited to the Timor-Leste tax on the relevant foreign income for each country, and excess credits cannot be carried forward. The Australia–Timor-Leste Taxation Code under Annex G of the Timor Sea Treaty governs the Joint Petroleum Development Area. A treaty benefit should not be assumed without checking that the relevant treaty is ratified and applies to the income. Individuals and non-government organizations generally register with ATTL, while companies obtain a TIN through SERVE.IP. Registration requires a valid email address, the relevant form and the responsible ATTL office. Tax returns and payments can be handled through a BNU branch, electronic payment, e-Tax or P24; a bank payment may carry a US$0.50 fee. ATTL staff do not personally receive tax payments. A taxpayer may appeal an assessment, additional liability or other decision in writing within 60 days of the notice to the National Tax Director or Appeals Division, with written reasons.